I. Tainted Net Neutrality -- Before They Ran to You, Now They Run From You

The letter represents the first time that the internet's top service firms have stood united against Chairman Wheeler's plan to allow internet service providers and wireless service operators segregate the internet into "fast lanes" and normal speed (or slow?) connections.

New FCC Chairman Tom Wheeler is not off to a good start so far. [Image Source: Reuters]

We write to express our support for a free and open internet. Over the past twenty years, American innovators have created countless Internet-based applications, content offerings, and services that are used around the world. These innovations have created enormous value for Internet users, fueled economic growth, and made our Internet companies global leaders. The innovation we have seen to date happened in a world without discrimination. An open Internet has also been a platform for free speech and opportunity for billions of users.

The Commission’s long-standing commitment and actions undertaken to protect the open Internet are a central reason why the Internet remains an engine of entrepreneurship and economic growth.

According to recent news reports, the Commission intends to propose rules that would enable phone and cable Internet service providers to discriminate both technically and financially against Internet companies and to impose new tolls on them. If these reports are correct, this represents a grave threat to the Internet.

Instead of permitting individualized bargaining and discrimination, the Commission’s rules should protect users and Internet companies on both fixed and mobile platforms against blocking, discrimination, and paid prioritization, and should make the market for Internet services more transparent. The rules should provide certainty to all market participants and keep the costs of regulation low.

Such rules are essential for the future of the Internet. This Commission should take the necessary steps to ensure that the Internet remains an open platform for speech and commerce so that America continues to lead the world in technology markets.

There were also a number of other large/influential publicly held tech firms, including Netflix, Inc. (NFLX), eBay, Inc. (EBAY), Twitter (TWTR), and Yahoo! Inc. (YHOO). Its top privately held backers include Tumblr, Kickstarter, Reddit, 4Chan, Imgur, Digg, and DuckDuckGo. There was also an active ensemble of open source players including the Mozilla Foundation and GitHub.

Of the names that one might expect to appear on such a letter, the only major absence was Apple, Inc. (AAPL).

Even without Apple it appears that there's a lot of money opposing the rules, which were scheduled to be officially announced May 15.

II. The Kiss of Death

And what makes things truly dire for Mr. Wheeler's plan is that there aren’t any clear big money backers of it -- a virtual death sentence for a plan in Washington D.C. these days, when there's money in opposition of a rule.

Blowback for the FCC Chairman was almost instantaneous after he circulated a memo allegedly outlining his plan to allow the internet to become a series of toll roads during the last week of April. You knew things were looking dire when two players who you would expect to be the biggest supporters of such plan -- U.S. President Barack Obama (D) and U.S. telecoms were tight lipped or hinted at disdain for the plan as it was lambasted by internet activists.

Big telecoms were irate that their former lobbyist ally refused to allow them to steamroll content competitors off the internet. [Image Source: Fierce Wireless Seminar via Wired]

It turns out that the telecom industry did look the gift horse in the mouth and it didn't like what it saw. The plan in question would reportedly ban ISP or wireless provider blacklisting of legal websites and web service or throttling/slowing to give an ISP/wireless provider's in-house service an anti-competitive advantage. Those were both much desired features for ISPs like Comcast Corp. (CMCSA) and Verizon Communications Inc. (VZ) who were looking to dabble in the content/internet service business.

Even if Mr. Wheeler delivered them one of the biggest allowances they had been hoping for to boost profits, the fact that that gift wrapped package was reportedly cloaked in these modest pro-net neutrality terms was enough to sour telecoms to the sweet surprise underneath. Telecoms didn't want Mr. Wheeler to maim net neutrality; they wanted him to kill it dead.

My friends outside the US pay 1/2 what my Americans pay for internet for speeds about 5 times as fast.

All of this net neutrality vs non-net neutrality debate and who will charge whom for bandwidth just seems like a distraction from the sad state of broadband in the US.

When ISPs can blame sites for offering customers too much content and get politicians to raise a fuss, they get users to take sides politically instead of just demanding ISPs increase their capacity to deliver.

It will be when ISP's finally get what they want and are able to charge Internet access the same way they do for their cable packages. Want Netflex you'll need the Basic + netflex package 69.99, whats that you also want Web xyz, you'll have to add the webxzy package for another 39.99.

The Internet is eating their Cable business and they desperately want to stop that while also making more moeny off their ISP side.

Don't forget that the internet was started by DARPA, a US government agency. The WWW was invented by CERN, a non-profit intergovernmental research agency.

I'd rather it was maintained by governments or not-for profit groups. There is absolutely no way the internet would be as useful as it is today if it were invented or managed by a for-profit corporation. It's only successful because the technologies which underpin it's ability to function are open sourced. Can you imagine if someone tried to patent email? Packet switching? DNS?

But who should pay for the increase in capacity? Netflix said it should be Comcast (which means everyone) and Comcast said it should be Netflix (their customers) since they use such a large portion of that capacity. In the end Netflix reluctantly agreed to pay a portion of that cost. Unfortunately to get to that point Comcast strong armed NF by throttling their data.

quote: My friends outside the US pay 1/2 what my Americans pay for internet for speeds about 5 times as fast.

That's the usual meme without any real truth behind it. Feel free to back up this statement. The average internet connection is faster than most countries including every country in North and South America and most EU countries including the UK, France, and Germany. So, I don't know what countries your friends live in with this mythical 5x the speed at half the cost.

The truth is, the US is (according to Akamai) #10 for average speed in the world. The countries that are faster have a much smaller geographic footprint than the US.

I am not going to take the time to look at the numbers but I think that argument is based on average income versus a per Mbps cost index. I'm sure it isn't x5 at 1/2 cost but their speed costs are quite generous in terms of how much of a person's income is paying for that speed. Like I said, I don't have any facts so this could all be completely wrong.

Mobile does cost me a $23/mo (PLN69) at max but if I am not using it much (while on a farm) the monthly payment is typically around $5. [This is a prepaid with fixed price of PLN2 $0,65 per day, so if you dont use any bit in a day, the cost for that day is some $0.10 from the fixed minimal payment $3/mo].

In my city's mailbox I constantly have dead-tree spam with offers ranging from 10M DSL for $10 to 100M fiber for $33. All because four big and a dozen smaller ISPs operating in the neighborhood wants me as a customer (in the city I use mobile though).

My USA friends cannot get to their farm nothing but 56kbps over the phone modem. Thats the price of the duopoly.

Let's face facts. The president nominated this guy. The Senate approved him. These are the men who steer this country's direction, and they can't even seem to master something simple like NOT HIRING A GUY WHO HAS BEEN LOBBYING FOR TELECOMS HIS ENTIRE CAREER for the job of HEAD OF THE FEDERAL COMMUNICATIONS COMMISSION.

/rant

The good news here is that this is the most clear-cut and high-visibility demonstration of how lobbying has a detrimental affect upon the public.

P.S.

If Netflix has to pay a premium, Google should for Youtube. But a better idea is just to leave it so that your monthly ISP fee gets you equal and unrestricted and unlimited access to whatever you want to use the connection for. I don't understand why this is rocket science for some people.

Part of me would love to see level 3 and cogent say screw you verizon and comcast, how about we don't peer with you and see how long that last when customers have a horrid experiencing accessing the internet.

Anyone?This kind of discussion is in terms in several countries, it's being discussed here in Brazil also, and yeah, lobbyist are everywhere, specially here. What i don't get is, aren't we all already paying for the service? Google pays for its data centers, we pay for our connection also, it seems like i have to pay twice for a burger, pay to eat it, and pay because i enjoyed it.

quote: With Comcast already forcing Netflix to pay heavy tolls, and with Netflix passing on those costs to consumers, time is running out for net neutrality's supporters.

It has been traditional in the telecommunications industry from almost the very beginning to pass the cost of providing a special service on to customers. Every country has a range of call types that all cost more than local calls, e.g. toll calls, long distance calls, operator assisted calls, etc.The other side of the coin is that when I make a phone call I expect it to be my business as to who I call.Then along came the internet.I can't help but think that a whole lot of this is related to "unlimited" plans, where the costs associated with these plans are actually costing the ISP. I think they should ban "unlimited" plans unless the ISP really doesn't care how much you use. "Fair Use" type arguments are just a way of saying that ISP does care how much you use.

The issue is that internet carriers receive various legal protections. Some of these are those common to all corporations (like limited liability); some are specific to their particular task (like no liability if their connection is used for terrorism or illegal activities).That's the way the system works --- you get some breaks, and in return you abide by some rules. The meta-theme is an assumption/hope that this balance is overall what's best for society.

If you want to form an ISP that doesn't want this balance, go right ahead. Create an ISP that's not a corporation (ie you personally are liable for all debts) and tell the world and the Feds that you don't want common carrier protections in return for your "right" to charge everyone who connects to you a variety of personalized and capricious fees.

Just don't come crying to us when, a few days later, someone sues you for the fact that your connection was used in connection with some fraud (no common carrier protection), and the after the trial all your personal assets are seized (no LLC protection).

Libertarians are very gung ho on how they claim they want things to work --- but they never seem to understand the ACTUAL consequences of switching to the model they want. There is no LLC for example in any genuine Libertaria...

quote: So, as a businessman, I shouldn't be allowed to offer my ISP an extra $100 a month for a faster internet connection?

Your business can offer your ISP more money to make your Internet connection faster.

Your business cannot offer a customer's ISP more money to make your data to them faster. That's essentially the same thing as making other businesses' data to those same customers slower.

Put another way:

If you pay your ISP more money for more bandwidth and it degrades the bandwidth of competitors using the same ISP, they have the option to switch to a different ISP. The ISP thus has the incentive to use your extra payment to improve their network to provide enough bandwidth to keep both of you happy.

If you pay a customer's ISP more money for more bandwidth and it degrades the bandwidth of competitors serving the same customer, they do not have the option to switch to a different ISP. The only thing they can do is also pay the customer's ISP, who is then getting paid by both of you to put things right back where they were in the first place - both of you getting the same priority. As long as neither of you are saturating their bandwidth, and the customers's ISP's customers are under a regulatory monopoly and can't switch ISPs, the customer's ISP has no incentive to use the extra money to improve their bandwidth. It's a pointless endeavor in which cash is exchanged for no net performance improvement, which is why it needs to be banned.

quote: So, as a businessman, I shouldn't be allowed to offer my ISP an extra $100 a month for a faster internet connection?

Except they already do. They pay for their current size of pipe sending data out of their business office. So these tolls would be akin to your current ISP saying we'll charge you $x/mo for a 25MB pipe. Ok, great deal thanks. But if you *actually* want use that 25MB pipe and be given any priority, you need to cough up a little more sir.

Or another analogy from different perspective. You buy stuff from Amazon, it ships to you via USPS. Either you or Amazon have already paid for the shipping cost. This would be the equivalent of USPS coming back to Amazon and asking them to pay an additional fee from a volume standpoint. USPS, "you use us to ship so many packages it's straining our logistical network and affecting the services of our other customers, therefore if you want to continue receiving priority service please pay us more".

The more I see this kind of pandering crap with our digital infrastructure, the more I begin to believe it should be a publicly regulated utility which makes me sad on the inside. I guess they just can't play nice...

Say you pay extra and go from a Honda Civic to a Corvette - great, your speed is faster overall.

Now everyone is on the highway trying to get to their destination, say the Netflix office for some bagels and television viewing. Everyone has to drive with the flow of traffic, except that if you pay $10,000 a month you can access a dedicated special lane that gets you there much faster and lets you drive past everyone else.

Obviously everyone would like to get to Netflix faster (who doesn't like bagels), but the construction company (ISPs) won't widen the highway. You want more lanes? You gotta pay for them. The problem is that not every Joe Shmoe can afford $10,000 a month. So you sit in your Corvette in traffic while Scrooge McDuck drives his used Ford Fiesta on the internet Autobahn and gets priority (not necessarily speed) over everyone else. Sound fair to you?

Obviously, the exact metaphors don't line up but I wasn't going to get into Layer 7 packet shaping and such.